[MadSudaca]

Thanks for taking the time to argue with me. You make some good points, however, for me personally, the evidence seems insufficient to sway me into believing that a deflationary currency is not beneficial.

I agree with your arguments about why some inflation is desired, it incentivizes people into spending their money, this makes it so that people engage in trade more often and, when voluntarily made on the basis of sound information, trade is beneficial to both parties. The net positive done in the world increases, at the small cost of some inflation, that is, the loss of some of your net worth if you rest on your laurels keeping your cash.

All this being said, for me there is a great asymmetry in the demonstrable harm done by inflation vs deflation. The list of people who have suffered the consequences of irresponsible governments is just too large, with you and me being at risk of suffering from them during our lifetime. The temptation is just too large to mishandle currency. While deflation is something that we will very hardly experience in our lifetime, barring some massive technological breakthrough that changes the means of production forever.

Moreover, there's no reason to believe that an economy can't work with deflation. Believe me, it CAN work with extreme inflation where calculation into the future is made very hard, it can surely work with deflation. Yes, some psychological aspects will be new, like people holding off purchases because their money will be worth more in the future, but that will not necessarily translate into a wide-scale halt in purchases. People will still want things more right now than the equivalent of their increasingly valuable currency. This new modality will introduce problems, no doubt, but these will be overcome by new adaptations. There is simply not enough evidence to ensure that a system like this can't work.

I agree that one ought to proceed with care in these matters because a system that seems to work in the beginning might fail catastrophically later on. However, as any change, one ought to weigh the negative risks against the benefits. With the promise of cryptocurrency we're entering a new world. One in which each individual will be more empowered and global commerce will be facilitated. The complexity of the world shows us that no matter how much optimism or pessimism you bake into your decisions, for some things, you will just never know for sure.

Lastly, another problem with inflation is that it favors the elites. Possibly, this is one of the biggest reasons why it's so widely disseminated. Those close to the central banks, those that understand about finance, those that seek power for themselves at the expense of others, among others. This kind of centralization of power motivates individuals at the top to sell the idea to the masses as if it's for their own good, and sometimes it is, but you can't deny that the incentives do not point to this being something that overwhelmingly favors the disenfranchised and the ignorant.